Since 11 March, when the ongoing COVID-19 outbreak was officially recognized as a “pandemic" by the WHO, the virus has spread even farther and wider.
Although most Middle Eastern nations are still trying to nip the epidemic in the bud, the virus has dramatically disrupted the everyday life in Europe and the US, among other places.
However, both the new coronavirus and its economic side-effects have reached the GCC. As of 16 March, around 401 positive coronavirus cases have been reported in Qatar. Meanwhile, Bahrain, Saudi Arabia, the UAE, and Kuwait have reported 100-250 cases.Iraq, Lebanon, Oman, Algeria, Egypt, and Morocco have also reported cases, though the matter has not gotten out of hand yet in any of these countries. Iran, on the other hand, remains an epicenter of COVID-19 with 14,000 cases.
Most governments in the region have taken steps to protect the public. Starting on 15 March, Saudi Arabia will suspend all international flights to and from the country for at least two weeks to curb the spread of COVID-19. Even visits to Muslim holy sites in Mecca and Medina have been effectively suspended.
Dubai has called off all public events in hotels and other entertainment destinations. Multiple Government Authorities in the Emirate of Dubai, meanwhile, have directed public venues to close temporarily in response to the pandemic, according to Khaleej Times.
In Kuwait, the Ministry of Awqaf and Islamic Affairs has decided to close the mosques until further notice, while temporarily altering the wording of Adhan—the Islamic call to prayer—to invite the believers to say their prayers at home instead of going to a mosque.
As of writing, however, no country in the region has enforced a nationwide lockdown similar to those in place in Italy and Spain.
Predictably, equity markets around the world reacted to the new developments last week. Stock markets in the US fell in response to the WHO's declaration of COVID-19 as a pandemic, as did most major indexes in Asian and Middle Eastern markets.
Middle Eastern equity markets responded to the outbreak as early as 1 March, with Saudi Aramco's shares dropping to their original value set at the company's initial public offering—though this was also influenced by falling oil prices.
As a beacon of hope, Wall Street bounced back by 9% after President Donald Trump's declaration of national emergency because of the virus crisis on 13 March.
It is hoped that Wall Street's revival will soon echo in Middle Eastern markets, though this has not been the case so far. Those markets in the MENA region which operate on Sundays did not have a good day on 15 March, with Dubai's main share index falling 4%.
The COVID-19 pandemic is causing panic in the business community in the GCC, especially as the region's economy heavily relies on expats and international links.
Many wonder to what extent the reactions in the market are driven by hysteria and how long-lasting the impacts of the pandemic can be.
First, the “pandemic" status does not mean that all hope is lost; some countries have been largely successful in controlling the outbreak thus far, proving that COVID-19 is not an undefeatable evil.
The GCC nations, for instance, are well positioned to use the model set by Singapore for bringing the outbreak under control.
Since the beginning of the virus crisis in Asia, Singapore has publicly announced the latest news and statistics related to the outbreak within its borders with transparency and in a timely manner.
At the same time, Singapore has acted decisively in isolating those who are suspected to carry the virus, levying fines on those who ignore the quarantine. The Singaporean experience shows that the timely distribution of information and taking real steps can actually save lives.
Nevertheless, even if the outbreak inevitably goes rampant to infect 60-70% of the population—as the German and British governments have predicted—it will not bring most Middle Eastern economy to their knees.
Although COVID-19 has tragically taken lives around the world, the mortality rate (2-4% on average) is not high enough to incapacitate the workforce, especially as the rate is much lower in those who are in working age (0.6% in people under 59).
The young population of the GCC—and the MENA region in general—is a primary risk mitigator for the region, given the fact that a country's demographics is directly linked to the mortality rate.
Italy, for instance, has had the relatively high mortality rate of 5% so far, because—with 25% of its citizens being over 65—it has an aging population.
The GCC, on the other hand, has a very young population makeup. The median age in Saudi Arabia, the most populous GCC member, is a little over 27—compared to 47 in Italy.
However, the GCC may be affected by the curbing of international travel. At least two GCC nations, namely the UAE and Qatar, have hyper-globalized economies, while all six GCC members have strong ties with China and Europe—which are both affected by the COVID-19 pandemic.
For the time being, however, we can take comfort in the hope that the economic fallout caused by the COVID-19 pandemic might not be long-term and irreversible, even though its short-term effects may be felt in the hospitality sector, aviation, and retail.